If you have a flood and a fire, you could have zero problems rather than two

Suppose that Labour is right that there is a flood of Chinese investment currently driving up Auckland house prices, and suppose further that some of the economic commentary is right that this could just be the start of it.

Suppose that you had a river in flood. Downstream from a dam, a house is on fire. The dam diverts the water over a pile of farmland and away from the house. If you opened up one of the dam sluices, some of that water could go to put out the fire and, at the same time, ease flooding on the farmland. What would you think about folks who stood at the sluice gate arguing about where the water was coming from rather than opening the tap?

If there’s a flood of foreign capital coming in, why can’t we change the policy settings? It’s a crisitunity*, not a crisis!

Ease up zoning, both up and out, so that foreign money can build new apartment buildings, new townhouses, new mid-rises, and new subdivisions. Ease up the Overseas Investment Act so that land bought by foreigners for subdivisions automatically was approved.**

What’s the worst that could happen? If a pile of foreign investors put too much money building new housing for Auckland, they’ll lose their shirts, Auckland still has the housing, rents drop and Auckland could be affordable again. In what crazy world is that a worst case anyway?

Is this potentially the single greatest wasted opportunity of the last decade?